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Commercial Sublease Agreement for Saudi Arabia

Commercial Sublease Agreement Template for Saudi Arabia

A Commercial Sublease Agreement governed by Saudi Arabian law is a legally binding document that establishes the terms and conditions under which a tenant (sublandlord) leases all or part of their leased premises to another party (subtenant). This document must comply with both Sharia law principles and Saudi commercial regulations, including relevant provisions of the Saudi Real Estate Law and Commercial Court Law. It details the rights and obligations of all parties, including rent payments, permitted use, maintenance responsibilities, and compliance with local regulations, while ensuring adherence to the original head lease terms and obtaining necessary governmental approvals.

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What is a Commercial Sublease Agreement?

The Commercial Sublease Agreement is essential in Saudi Arabia's evolving commercial real estate market, particularly as businesses seek flexible space solutions under Vision 2030's economic diversification initiatives. This document is used when a primary tenant wishes to sublease their commercial space to another business entity, requiring careful consideration of both the head lease terms and Saudi legal requirements. The agreement must address key aspects including property rights, commercial terms, and regulatory compliance while respecting Sharia law principles. It typically includes detailed provisions for rent, maintenance, utilities, insurance, and dispute resolution, along with specific requirements for municipal approvals and building regulations. The document becomes particularly relevant in commercial centers, office complexes, and industrial zones where subleasing is common practice, requiring careful attention to both commercial interests and legal compliance.

What sections should be included in a Commercial Sublease Agreement?

1. Parties: Identification of all parties including head landlord, sublandlord, and subtenant with full legal names and details

2. Background: Context of the sublease arrangement, including reference to the head lease and confirmation of authority to sublease

3. Definitions: Definitions of key terms used throughout the agreement, including specific Saudi legal and commercial terms

4. Grant of Sublease: Formal grant of the sublease and description of the subleased premises

5. Term and Renewal: Duration of sublease, commencement date, and any renewal options

6. Rent and Payment Terms: Rent amount, payment schedule, method of payment, and late payment consequences

7. Security Deposit: Amount, form, and conditions for return of security deposit

8. Permitted Use: Specified allowed uses of the premises in compliance with Saudi regulations and head lease

9. Maintenance and Repairs: Responsibilities of each party for maintenance, repairs, and replacements

10. Utilities and Services: Responsibility for utilities, services, and related costs

11. Insurance Requirements: Required insurance coverage for both sublandlord and subtenant

12. Assignment and Further Subletting: Restrictions and conditions on assignment or further subletting

13. Default and Remedies: Events of default and available remedies for all parties

14. Termination: Grounds for termination and the process thereof

15. Governing Law and Dispute Resolution: Application of Saudi law and dispute resolution mechanisms

16. Notices: Method and addresses for formal notices between parties

17. Execution: Signature blocks and execution requirements under Saudi law

What sections are optional to include in a Commercial Sublease Agreement?

1. Fit-out Works: Details of any permitted modifications or improvements to the premises - include if tenant will perform any modifications

2. Shared Facilities: Rights and obligations regarding common areas or shared facilities - include if premises are part of a larger building

3. Operating Expenses: Allocation of building operating costs - include for multi-tenant buildings

4. Head Landlord Consent: Specific conditions required by head landlord - include if head lease requires specific conditions

5. Religious Observance: Provisions for prayer rooms or religious requirements - include if relevant to the premises type

6. Foreign Investment Provisions: Additional provisions required for foreign tenants - include if subtenant is a foreign entity

7. Government Approvals: Required permits and licenses - include if specific governmental approvals are needed

8. Force Majeure: Provisions for unforeseen circumstances - include if requested by parties

What schedules should be included in a Commercial Sublease Agreement?

1. Schedule 1 - Premises Plan: Detailed plan and measurements of the subleased premises

2. Schedule 2 - Head Lease: Copy or relevant excerpts of the head lease agreement

3. Schedule 3 - Rent Schedule: Detailed breakdown of rent payments and escalations

4. Schedule 4 - Service Charges: Breakdown of service charges and payment obligations

5. Schedule 5 - Building Rules: Building regulations and operational rules

6. Schedule 6 - Handover Condition: Detailed description and photos of premises condition at handover

7. Schedule 7 - Permitted Alterations: Specifications of allowed modifications to the premises

8. Schedule 8 - Insurance Requirements: Detailed insurance requirements and minimum coverage levels

9. Appendix A - Required Permits: List of required governmental and regulatory permits

10. Appendix B - Head Landlord Consent: Written consent from head landlord for the sublease

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions

















































Clauses









































Relevant Industries

Real Estate

Commercial Property

Retail

Office Space

Industrial

Hospitality

Healthcare

Education

Manufacturing

Logistics

Technology

Professional Services

Banking and Finance

Telecommunications

Relevant Teams

Legal

Real Estate

Facilities Management

Operations

Finance

Compliance

Risk Management

Property Services

Business Development

Commercial Operations

Administration

Relevant Roles

Real Estate Manager

Property Manager

Legal Counsel

Facilities Manager

Commercial Director

Operations Manager

Chief Financial Officer

Business Development Manager

Asset Manager

Compliance Officer

Contract Administrator

Regional Director

Branch Manager

Real Estate Investment Manager

Risk Manager

Property Services Director

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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